Font Size

HM Revenue and Customs Brief 38/11


HM Revenue and Customs -Tax Authorities

Tax Articles
Submit Articles   Back to Articles

Issued on  21 November 2011

VAT Sailaway Boat Scheme - important change from 1 January 2012

Who needs to read this?

VAT-registered businesses who sell pleasure craft to private individuals under the Sailaway Boat Scheme.

What is the change?

From 1 January 2012, the current concessionary treatment which allows a VAT-registered business to zero rate the supply of a sailaway boat to a UK resident who intends to keep it outside the European Community (EC) will be withdrawn. From this date the scheme can no longer be used for sales to UK residents.

However, a business can zero rate the supply of a boat to a UK resident provided that it meets the conditions for zero rating a direct export set out in paragraph 3.3 of Notice 703 VAT: Export of goods from the United Kingdom. In particular, this means that the business must undertake to export the boat themselves or make all the arrangements for the export and obtain satisfactory evidence of export within three months.

The reason for this change

The VAT Sailaway Boat Scheme allows overseas residents to obtain VAT refunds on vessels purchased for personal export to a destination outside the EU. Under extra-statutory concession 8.1, HM Revenue & Customs (HMRC) has allowed UK residents to purchase boats under the scheme. However, HMRC does not have the discretion to allow this concessionary treatment, and it is not possible to put the concession on a statutory basis as this would contravene EU law. The Government announced in December 2010 that the concession would be withdrawn on 1 January 2012 to allow businesses time to prepare for the change.

The legal basis for the scheme

Article 146 of Directive 2006/112/EC permits zero rating of goods which are "…dispatched or transported to a destination outside the (European) Community by or on behalf of a purchaser not established within their respective territory…". The Article is given effect in Regulation 129 of the VAT Regulations 1995 (SI 1995/2518). Both the Article and the Regulation clearly exclude supplies to UK residents from the scope of zero rating.

Further advice

If you have any questions about this change, please contact Sarah Bush on Tel 0151 703 8950 or email Sarah Bush.

About the Author

© Crown Copyright 2011.

A licence is needed to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs.

Follow us @Scopulus_News

Article Published/Sorted/Amended on Scopulus 2011-11-22 12:51:23 in Tax Articles

All Articles

Copyright © 2004-2021 Scopulus Limited. All rights reserved.